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2 Introduction List John Redding, MD, MBA Manager Blue & Co., LLC Healthcare Consulting Practice (312) John Redding, MD is a Manager at Blue Consulting Services. John brings over 15 years of healthcare experience to HCS and has served as a trusted advisor to providers and healthcare executives for the last 6 years. In his role at Blue, John works with health systems, hospitals, and physician organizations to develop collaborative physician-hospital working relationships and business ventures. John has extensive experience leading and supporting a broad spectrum of physician-hospital alignment initiatives, from developing and implementing physician employment strategies to providing interim management for a Clinically Integrated Physician Network / Accountable Care Organization. 2

3 Objectives 1. Present a high level overview of the Medicare Shared Savings Program and the requirements to participate in the Program as an ACO. 2. Describe key characteristic of ACOs that will increase their probability of realizing an ROI from their initial and ongoing ACO-related investments. 3. Enable participants to evaluate the short-term and longterm fit of the ACO model for their organization and identify alternative strategies to short-term adoption of the ACO model. 3

5 Definitions Like unicorns. No one has ever really seen one locally, but everyone seems to know what they look like. Jim Fitzpatrick, VP MA Hospital Association 5

6 Technical Definition Center for Medicare & Medicaid Services Medicare Shared Savings Program A shared savings program that promotes accountability for a patient population, coordinates items and services under Medicare Part A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient care. *Center for Medicare and Medicaid Services. Accountable Care Organization An organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it. 6

9 Eligibility Formation ACOs can be formed by one or more of the following participants: 1. ACO professionals in group practice arrangements 2. Networks of individual practices of ACO professionals 3. Partnerships or joint venture arrangements between hospitals and ACO professionals 4. Hospitals employing ACO professionals 5. CAHs that bill under Method II 6. RHCs 7. FQHCs Legal entity under State, Federal or Tribal law May not participate in a duplicative shared savings program 9

10 Eligibility Participation Must include enough primary care professionals to cover at least 5,000 Medicare beneficiaries ACO participants upon whom beneficiary assignment is determined must be exclusive to one ACO Must provide list of TINs & NIPs Must notify when adding or removing ACO providers or suppliers within 30 days Must describe how shared savings will be distributed 10

11 Eligibility Governance 75% ACO Participants Must maintain an identifiable governing body with the authority to execute the functions of the ACO Has the following responsibilities: Provide oversight & direction 1 Medicare Beneficiary Community Stakeholder (Optional) Hold ACO management accountable and Defines processes for evidence-based medicine, quality & cost reporting, and coordinating care. Governing bodies governing process must be transparent Must have a conflict of interests policy 11

15 Options Start Dates Three options for participation: 1. April 1, 2012 Term of Agreement is 3 years and 9 months First period 21 months 2. July 1, 2012 Term of agreement is 3 years and 6 months First period 18 months 3. January 1, 2013 and beyond Term of agreement is 3 years First period is 12 months 15

16 Options Tracks Track 1 (One-Sided Model) Shared savings only (no risk) Maximum of 50% share or 10% of benchmark performance Minimum savings rate based on a sliding scale determined by the number of beneficiaries No shared losses First dollar savings if minimum thresholds are met Track 2 (Two-Sided Model) Shared savings & losses (risk) Maximum of 60% share or 15% of benchmark performance Minimum savings rate set at a flat 2% Shared loss potential set at 1 minus the calculated shared savings rate Minimum loss rate set at a flat 2% Loss sharing limit increases over the 3 year term (5%, 7.5%, 10%) First dollar savings and losses if minimum thresholds are met 16

22 Operations Marketing & Notification Marketing materials defined as materials, used to educate, solicit, notify, or contact Medicare beneficiaries or providers and suppliers regarding the Shared Savings program May use marketing materials 5 days after filing them with the CMS and certifying that they comply with all requirements Must notify beneficiaries of participation at point-of-care Must post signs at their facilities Must make standardized written notices available 22

23 Coordination With Other Agencies Federal Trade Commission & The US Department of Justice Guidance applies to all ACOs No mandatory anti-trust review Voluntary expedited review (90 days) CMS to share application & data Safe harbor for ACOs with less than 30% market share in their PSA or under the rural exception Will vigilantly monitor complaints about ACO formation or conduct and take whatever enforcement action may be appropriate. Office of the Inspector General (for comment) Do not want to unduly limit impede development of beneficial ACOs Applies to Physician Self-Referral Law, Federal Anti- Kickback Statute, and the Civil Monetary Penalties Law Five proposed waivers 1. ACO Pre-Participation Waiver 2. ACO Participation Waiver 3. Shared Savings Distribution Waiver 4. Compliance with Physician Self-Referral Law 5. Patient Incentive Waiver Internal Revenue Service (for comment) ACOs engaged exclusively in the MSSP would still qualify for tax exempt status under 501(3)(c) Participation in the MSSP through an ACO will further the charitable purposes of the tax exempt organization The tax exempt organization does not have to have control over the ACO In general, will not consider participation inurement or impermissible private benefit Center for Medicare & Medicaid Innovation Advanced Payment ACO Model Start up capital for physician-only ACOs and rural ACOs Up to 50 ACOs ($170 M in funding) Must indicate interest in CMS filing Recipients selected based on formula 23

33 ACO Development Trends Five Trends In ACO Development 1. The number & types of ACOs are expanding 2. Growth is centered in larger population centers 3. Hospitals continue to ne the largest backers of ACOs, but physician groups are playing a increasingly larger role 4. Non-Medicare ACOs are experimenting with more diverse models that Medicare backed- ACOs 5. The success of any particular ACO model is still undetermined *David Muhlenstein et al., Growth and Dispersion of Accountable Care Organizations June 2012 Update, White Paper, (Leavitt Partners, June 2011). 33

37 The ACO Model Viable For Some And Likely To Impact Many The CMS & HHS have made significant modifications to their proposed regulations to increase the value proposition of the MSSP to hospitals and health systems Hospitals & health systems that dismissed the ACO model based on the proposed regulations would be wise to reconsider the opportunity provided by the program under the final regulations Although the MSSP will not be universally attractive, it is likely to impact a number of local and regional healthcare markets Hospital leaders should evaluate and begin planning for the potential impact of ACOs in their markets Whether or not participation in the MSSP is right for your organization at this time, business as usual will not be a sustainable long-term strategy 37

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